Singleton Op-Ed : Why Companies Should Care About Venezuela

Singleton Op-Ed : Why Companies Should Care About Venezuela

 

As Venezuela continues to verge toward regime change, many companies may be wondering why they should care.

Over the years, questions like this have hardly been limited to the Bolivarian Republic: Latin America has experienced its share of political and cultural quandaries. But as the region is the fastest growing market for e-commerce globally, a major source of U.S. overseas manufacturing and home to Mexico, the United States’ 3rd largest trade partner, these challenges are certainly worth navigating.

Many make the mistake of associating all of Latin America with political instability, and Hugo Chávez and his successor, Nicolás Maduro, certainly have not helped this stereotype. But it’s important to remember that each Latin American country has its own unique history, political system and legal framework, and each have market strengths and opportunities worth considering.

Take Honduras, for example. Headlines rarely cover this country’s relatively stable labor-employer relations, which, combined with the Central America Free Trade Agreement and its proximity to the U.S. market, makes Honduras a prime destination for U.S. investment.

Both Honduras and El Salvador are set to receive an influx of skilled, bilingual labor from the United States when their citizens’ Temporary Protected Status ends in 2019. Companies will find both these countries make a solid home for call centers, as well as other customer service and low-cost, skilled positions.

Also in both these countries — and the region in general — internet access continues to grow, particularly on mobile devices. This has led to digital communications becoming a major trend that is set to continue for the medium-term.

In particular, digital has huge potential in Colombia, where a booming middle class means a growing market for consumption of American products. Forget what you knew about Colombia in the 1990s, it is as safe as it is beautiful, and a successful transition to a functioning justice system means legal risk for companies is lower than ever.

Returning to Venezuela, thoughtful companies are keeping an eye on the situation there for a number of reasons. First, some must navigate sanctions on Venezuelan entities to avoid an increasing number of legal pitfalls. Others are watching like hawks to recoup investments lost during Chavez’s rule. In the medium-term, there will be major opportunities in the oil and gas sector once the government opens it up to private investment, a promise the interim government has already made. In the long term, Venezuelans currently living in exile will seek to return, and these Venezuelans will build back the enormous population of consumers the country traditionally had.

More importantly, companies have the opportunity to be part of what promises to be a complex economic solution to Venezuela’s collapse. Potential investors should be wary of investment strategies that could be construed as predatory or one-sided. Instead, they should consider a value proposition that provides the Venezuelan people with economic and social opportunities that will ultimately help the country rebuild. Investors who hope to recoup losses incurred during the Chavista era should take the long view and consider ways to ensure the sustainable recovery of their cash, which will in turn help to rebuild the country’s trust in the private sector.

It is impossible to generalize the opportunities and challenges of an entire region, and why would we want to? Its diversity is exactly what makes Latin America so exciting. A little political intelligence and regional expertise can help demystify the Western Hemisphere, setting businesses up to for success with a variety of audiences.

Lindsay Singleton is senior vice president at ROKK Solutions, where she leads policy consulting and communications strategy efforts. She lived and worked in Latin America for over a decade on behalf of the U.S. government and private sector and served as a foreign service officer in Venezuela from 2010-2013.